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For those of you CU students in Intro Game Theory this coming semester (all 27 of you), I’d suggest reading this piece ahead of time. We’ll spend a little time motivating the method early on, but for a good, thoughtful exposition of the role that formalizing our theories can play in conducting rigorous inquiry, there are few better than Harrison Wagner. Read it, then read it again.

Woke up this morning to see this story about South Korea’s new rules of engagement with respect to further military provocations from North Korea, where the new defense minister says that the South will respond with airstrikes to future hostile actions from its northern neighbor. Plenty of people will focus on the explicit mention of the tactic to be used—airstrikes, in which the South has a comparative advantage—but the most important part of the piece is right here:

Mr. Kim, 61, a former infantry commander who headed the Joint Chiefs of Staff, said the new rules of engagement would also give more authority to commanders in the field.

See that? The South is delegating the decision to use force to a lower level, commanders in the field, who in principle should be more willing to resort to violence with their own troops under attack than political leaders in Seoul, who we know would rather not see a war. You’ll recall, as well, that neither does the North, hence the use of “threats that leave something to chance” to enhance one’s bargaining position. In this particular case, the South’s political leadership is doing what it can to say, “Look, the decision to escalate might be out of our hands, because if you shell our troops again, they’re primed and ready and free to act in self-defense, because their commanders now have the authority to retaliate in a big way.”

It’s brinkmanship, as we talked about before, and it’s an expected step in the process. Neither side wants war, yet neither knows just how much of a risk of war the other side is willing to tolerate, so you see incremental steps, a bidding process as it were, to signal just how far you’re willing to go. All it takes to win a game of brinkmanship is to escalate just far enough to convince your opponent that you’ll run bigger risks than him (you’ll always raise the risks as little as possible, given what you must do to convince the other side, at each step, because the risks of things getting out of hand are real), and the recent nearby training exercises in the Yellow Sea and, now, the decision to take the decision for using force out of the hands of the political leadership shows that South Korea is upping the ante on its own.

So what happens next? Well, the North will have to decide whether it can tolerate this increased risk of retaliation from the South; if it can’t, then the South wins the bidding, and the North doesn’t provoke them again for a while. If it can tolerate this level of risk to get what it wants, then it may raise the risks a little bit more (but not a lot), and the game is, once again, back in the South’s court. Should be interesting, and, no matter what the North does, we’ll learn something from their response…

It’s been common for quite some time to call Kim Jong-Il irrational, and North Korea’s well-known ability to keep the world “guessing“—careening from talks to no talks, compliance to noncompliance, calls for aid to sinking ships and lobbing shells across the border—has done little to discourage this kind of talk. However, it’s dead wrong to infer “irrationality” (whatever that means) from unpredictability. In fact, one can argue that, in North Korea’s position, being unpredictable is quite shrewd and, yes, quite rational. Far from delusional or incoherent, I’d go so far as to call North Korea’s actions over Kim Jong-Il’s reign “rationally unpredictable.” What do I mean by that? More after the jump…